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Health insurance companies in California may not refuse to cover the cost of abortions, state insurance officials have ruled. The decision is a reversal of policy stemming from the decision by two Catholic universities not to fund elective abortions through their employee health plans.

Although the federal Affordable Care Act does not compel employers to provide workers with health insurance that includes abortion coverage, California’s Department of Managed Health Care (DMHC) Director Michelle Rouillard said in a letter to seven insurance companies on Friday that the state Constitution and a 1975 state law prohibits them from selling group plans that exclude the procedure. Rouillard said her department had “erroneously approved or did not object” to a small number of health insurance policies that excluded abortions.

But Bill Donahue, president of the Catholic League for Religious and Civil Rights, said both Santa Clara University and Loyola Marymount University had already agreed to cover abortions in cases threatening the mother’s life or health. Loyola also allowed employees to purchase separate insurance for elective abortions. The two schools said their insurers, Anthem Blue Cross and Kaiser Permanente, had cleared the move with the state.

Abortion-rights groups and university employees who objected to the decision lobbied the women’s caucus of the California Legislature, which in turn asked Gov. Jerry Brown to clarify and reverse the healthcare department’s decision.

The Life Legal Defense Foundation (LLDF) and Alliance Defending Freedom, sent a letter to Rouillard on Friday saying that under federal law, California cannot force employers to cover elective abortions. The groups said they would file a civil rights complaint with the federal government unless the state reinstated its previous policy.

“Pro-life employers have the freedom to choose health insurance plans that do not conflict with their beliefs on the dignity of human life,” LLDF Legal Director Catherine Short said. “California cannot be allowed to discriminate against health plans that don’t cover elective abortions and force people to purchase coverage that conflicts with their convictions.”

The legal associations argue that the California Constitution only prevents the state from withholding funds for abortions. More significantly, they said the DMHC’s decision conflicts with the Weldon Amendment, a federal law prohibiting federal funding for state agencies that discriminate against institutions that refuse to fund abortions. The groups said the DMHC faces potential loss of federal funding due to the violation.

“It smacks in the face of freedom,” said Dana Cody, LLDF executive director.

The two insurance companies told the San Jose Mercury News that they would comply with the new directive. Loyola and Santa Clara representatives said they would explore their options with Anthem Blue Cross and Kaiser Permanente.

In her letter to the insurers, Rouillard asked the companies to review their plans, including any the department had already approved, to make sure they are in compliance with the new guidance. “Abortion is a basic health care service,” Rouillard said. “All health plans must treat maternity services and legal abortion neutrally.”

But for Donahue, the DMHC’s decision constitutes a violation of religious liberty.

“Catholic universities have a right and a duty to uphold the tenets of their faith in everything they do,” he said. “Paying for abortions is in direct conflict with the teachings of the Catholic Church. Not only is this decision morally obscene, it violates the religious liberties of Catholic institutions.”